British Virgin Islands: Why The British Virgin Islands? A Guide To Setting Up And Doing Business

Why the BVI?

The British Virgin Islands (BVI) is a British Overseas Territory and is the world's pre-eminent corporate domicile.

Since the adoption of its pioneering Business Companies Act 2004 over 500,000 companies have been incorporated in the territory. Approximately 850,000 companies have been registered since 1984.

The BVI has a sophisticated and innovative legislative framework. This has made it a popular jurisdiction to incorporate private and holding companies, as well as public companies prior to admission to international stock exchanges. Companies incorporated in the BVI can list on the London Stock Exchange (LSE), LSE's AIM, the New York Stock Exchange, NASDAQ, the Hong Kong Stock Exchange, the International Securities Exchange and the Toronto Stock Exchange.

Key facts

  • The BVI is the world's leading offshore centre with more offshore companies than any other country.
  • The jurisdiction appears on the OECD's "white list" reflecting a high level of tax transparency, regulatory and compliance standards.
  • The BVI is recognised as a leading financial centre. The BVI was 34th in the list of leading G2 international financial centres in the Global Financial Centres Index (GFCI) published by the City of London ranked above Shanghai, Bahrain, Qatar, Milan, Madrid and Mumbai.
  • A Financial Times survey confirmed the BVI as the second largest source of international foreign direct investment globally, with upwards of US$125 billion invested through the BVI each year.
  • The BVI has zero-rated corporation tax, with no wealth, capital gains or estate tax for offshore entities.
  • The administrative burden and costs of incorporating or maintaining a company in the BVI are low. BVI companies are operationally flexible. Corporate governance can be adapted to suit the structure.
  • The BVI has a familiar and established legal and court system based on English common law. This offers a stable and certain framework for investors.
  • The BVI has no exchange controls. The local currency is the US dollar.

Incorporating a company

International investors are attracted to the BVI by the strong regulatory framework, low tax and an established legal system, which ensures that the territory is a neutral and safe place to pool capital. This neutrality of venue makes it an appropriate place for outside investors to establish a holding company or to invest into markets where there may be political risk or legal barriers that deter direct investment.

A recent trend has been the number of Chinese based companies that have used BVI vehicles to float on NASDAQ and AIM as a means of raising funds. The ability for BVI companies to list in Hong Kong provides an important exit route enabling private equity investors to realise their holdings in China and other emerging markets.

BVI companies are often used as joint venture vehicles in Asia and Russia as a result of the protection given to shareholders and the ability to ring fence liabilities. There is no double layer of taxation beyond those that may exist in an investor's home country.

The BVI provides flexibility in structuring mergers and acquisitions, which enables a BVI company to merge with a foreign company. It is also possible to redomicile an existing foreign company into the BVI, or to redomicile an existing BVI company overseas.

Directors' duties are based upon English common law which provides certainty.

Hedge Funds

The BVI is popular with Hedge Fund managers and is the second largest Hedge Fund domicile in the world.

Insurance

The BVI is the world's fourth largest captive domicile for enhanced insurance products and services. The BVI has introduced a new Insurance Act 2008, Insurance Regulations 2009 and Regulatory Code which came into force on 1 February 2010, replacing the Insurance Act 1994 and the Insurance Regulations 1995.

This new legislative framework ensures that the BVI remains an attractive environment for a range of insurance services and products.

Working with you

We can assist and advise regarding incorporating and establishing a BVI company, hedge fund or insurance captive. As a leading corporate and wealth planning firm with offices in the US, Europe, Asia and the Caribbean, we are uniquely placed to advise regarding structuring and incorporation of BVI companies. This includes the wealth planning and tax consequences of structuring an investment to planning a route to exit and realisation of investments as part of an Initial Public Offering (IPO), sale or private equity partnership.

The Financial Services Commission

The Financial Services Commission (FSC) regulates financial services activities operating in and from within the BVI, pursuant to BVI laws to ensure compliance with relevant international standards and conduct of business practices.

The FSC's mandate includes banking and fiduciary business, investment business, insolvency services, insurance business, company management, company registration and intellectual property. The FSC seeks to promote accountability, transparency and good governance.

The jurisdiction has benefited from collaboration between the FSC and private sector stakeholders in developing the financial services environment, which has ensured that the BVI remains competitive and attractive for legitimate business.

BVI IOSCO membership

In recognition of the BVI's international cooperation framework and its long-standing commitment to comply with international standards, the FSC was welcomed as an ordinary member of the International Organisation of Securities Commissions (IOSCO) in April 2007.

IOSCO's executive committee recommended the BVI's membership having concluded that the BVI had complied with all of the standards and requirements outlined in the IOSCO Multilateral Memorandum of Understanding (MoU) concerning consultation, cooperation and the exchange of information. The BVI was the first country to be admitted to ordinary membership of IOSCO based on changes it has made to its legislation under the MoU.

IOSCO is recognised as the international standard setter for securities markets, and membership is widely sought after by securities regulators. Becoming a member of IOSCO is a very important accomplishment for the BVI as it confirms that it is one of the premier and most effectively regulated offshore jurisdictions in the world.

Commercial Court

The BVI has a respected and established Court system based upon English common law. The territory is part of the Eastern Caribbean Supreme Court (ECSC) region.

A new specialist Commercial Court was created in the BVI in 2009 to reflect the importance of the territory as a leading financial centre. The Court is a specialist division of the High Court of the ECSC and hears commercial and finance matters from the BVI.

The Court is equipped with advanced facilities including video link and transcription technology and has established a reputation as a centre of excellence and fairness. Leading legal professionals and QCs from around the world appear before the Court dealing with complex cross-border commercial and insolvency matters.

Appeals are to the Eastern Caribbean Court of Appeal, with a further right of appeal to the Privy Council in England.

Anti-money laundering regime

The BVI introduced enhanced money laundering regulations in 2008 supplementing the regime that exists under the Proceeds of Criminal Conduct Act 1997 (PCCA).

The Anti-Money Laundering Regulations 2008 (as amended), the Anti-Money Laundering and Terrorist Financing Code of Practice 2008 (the "Code") and the PCCA, provide a comprehensive regime to counter money laundering and terrorist finance. This makes it an offence to possess proceeds of crime, or to assist, conceal or tip off persons who hold proceeds of crime.

The Code requires regulated firms to have rigorous KYC and customer due diligence systems and controls, compliance manuals and infrastructure to report suspicious transactions. The regime is now broadly consistent with the 40+9 Recommendations of the Financial Action Task Force (FATF).

Securities, Investment Business and Financial Services

Consistent with the FSC's obligations as a member of IOSCO, the BVI enacted the Securities and Investment Business Act 2010 (SIBA) and the Mutual Funds Regulations 2010. The legislation and regulations introduce a new investment business licensing regime which regulate investment advisors, broker-dealers, market-makers and custodians. They also deal with registration of public mutual funds, the recognition of private and professional funds and the control of offers of securities to the public in the Virgin Islands and creates offences relating to insider trading and market abuse.

Persons carrying on "Investment Business" as defined by SIBA in or from within the BVI are required to be licensed by the FSC. SIBA may affect non-BVI persons or companies providing investment services to BVI business companies unless they fall within exemptions set out in SIBA.

The BVI also introduced the Financing and Money Services Act 2009 ("FSMA") on 31 March 2010. FSMA ensures that the BVI meets or exceeds best practice for financial regulation and complies with Recommendation 23 of the FATF. FSMA introduces a regime for the licensing, regulation and supervision of financing and money services carried from or within the BVI, and criminal offences for non-compliance.

Trust Law

The BVI's trust laws are derived from English trust law. Principles of English common law and equity apply as supplemented by the trust laws of the BVI, the main statutes being the Trustee (Amendment) Acts 1993 and 2003, the Virgin Islands Special Trusts Act 2003, the Banks and Trust Companies Act 1990, and the Financial Services (Exemptions) Regulations 2007.

Considerable use has been made of the 2007 regulations to establish private trust companies (PTCs) for holding and consolidating family wealth whilst retaining significant control over the trustees' decisions by being directors of the PTC. PTCs are exempt from the requirement to obtain a trust license providing that they carry on either un-remunerated trust business or related trust business, that they do not undertake any other type of business, and that their services are not made available to the general public.

PTCs must also ensure that their Registered Agents hold the appropriate Class I trust license issued under the Banks and Trust Companies Act 1990. The PTC will be regarded as carrying on an unauthorised financial services business if the exemption is lost. New and existing PTCs will have to adopt "PTC" within their name to indicate their purpose.

There is no formal application process for exempt status. Exemption is automatic if the company meets the criteria in the regulations and the registered agent determines that the company qualifies as a PTC. The only documents that need to be completed are the PTC's Memorandum and Articles of Association along with a certificate from the first registered agent.

The 2007 regulations allow for the remuneration of directors and officers of the PTC in so far as they are made for professional director services provided to the PTC, and for certain costs and expenses incurred by the PTC. The PTC must have at least one director but there is no requirement for any of the directors to be resident in the BVI.

It has now become commonplace for the ownership and control of the PTC to be structured through a Vista trust under the Virgin Islands Special Trust Act, 2003.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions